Many vital functions of nerve cells arc regulated by reversible protein phosphorylation, including the control of neurotransmitter release, signalling by neurotransmitter receptors and ion channels, and various aspects of gene expression, neuronal differentiation and development. A systematic investigation of the distribution of protein kinases and their substrates in the rat basal ganglia has identified a family of substrates for cAMP-dependent protein kinase (PKA). One of these substrates, termed DARPP-32, was found to be highly enriched in medium-sized spiny neurons that possess D I dopamine receptors, and is likely to be involved in the physiological effects of dopamine mediated through dopamine-sensitive adenylyl cyclase. Biochemical studies have suggested that DARPP-32 functions to inhibit PP1, a multi-functional serine/threonine protein phosphatase. The high levels of DARPP-32 in dopaminoceptive neurons in the basal ganglia and its ability to potently inhibit protein phosphatase-1 (PP1) has suggested that DARPP-32 is central to the interactions of dopamine and other neurotransmitters acting on D1 dopaminoceptive neurons. In particular, medium-spiny neurons receive an extensive excitatory input from glutamate. containing cortical neurons, and dopamine, by stimulating D1 receptors, inhibits the responsiveness of striatal neurons to glutamate. Thus, DARPP-32 and PP1 are likely to be involved in the interaction of glutamate and dopamine in the striatum. Recent studies have identified that Na+K+ATPase, as well as Na+ and Ca2+ channels, are modulated via phosphorylation by variouS protein kinases and are likely to be targets for dephosphorylation by PP1. A complete biochemical analysis of these various downstream targets for PP1 and the regulation of their dephosphorylation by DARPP-32 will, therefore, be necessary to fully understand the actions of dopamine and other neurotransmitters that influence this signal transduction pathway. In addition, the elucidation of the structural basis for the ability of phospho-DARPP-32 to inhibit PP1 will further the understanding of dopamine signalling and will hopefully allow the design of specific agonists and antagonists that influence this signalling pathway. Such reagents may lead to the development of new therapeutic approaches to the treatment of such diseases as Parkinson's disease and schizophrenia, that result from disruption of normal dopaminergic neurotransmission.